updated 12:50 pm EST, Fri November 30, 2007

3G iPhone, EU estimates

AT&T chariman Randall Stephenson confirmed a 3G-capable iPhone arriving some time next year, coinciding with hopes expressed by Apple CEO Steve Jobs in September. "You'll have it next year," Stephenson told Piper Jaffray senior analyst Gene Munster, referring to a faster 3G iPhone. What's more, iPhone estimates from Apple's wireless carrier partners in Europe expect roughly 100,000 iPhone sales for each carrier during 2007. Meeting those sales goals would put a quarter million iPhones in the hands of European customers, bringing Apple's global iPhone sales count to around 2 million.

"In December, we are modeling for 250k European iPhones, and 2m total phones. If Apple sells 100k+ iPhones in the UK, Germany and France, there would likely be upside to our iPhone estimates of 50k units," Munster explained. "So far, it appears as though iPhone units in Europe are not exceeding the carriers' expectations; however, the carriers' estimates are 50k higher than our estimate of 250k in Europe."

Apple's UK carrier partner 02 expected "a couple of hundred thousand" units to sell in the first 2 months after launch, and activated 8,000 iPhones on launch day. Germany's carrier -- T-Mobile -- indicated that it sold more than 10,000 iPhones in the first day of availability on November 9th. Due to a temporary legal injunction, however, Apple and T-Mobile are now selling unlocked iPhones for €1,000 in Germany.

Orange, Apple's French carrier of choice, indicated that it expects to sell over 100,000 iPhones in France by the end of 2007.

Verizon's impact on iPhone

Verizon recently announced that it will open its network to "any application on any device," making it easier for Google Android to expand in the market. The announcement doesn't affect the iPhone directly, as iPhone uses GSM technology while Verizon's network uses CDMA technology. Nevertheless Munster believes the long term outcome of Verizon's move is difficult to predict.

"The Verizon announcement coincides with Google's Android plans and the formation of the Open Handset Alliance, OHA, of which Verizon is a member. While it is too early to tell, this could be the beginning of a new chapter in the wireless market," the analyst said.

"Microsoft has taken its traditional software-centric approach offering Windows Mobile to any device maker wishing to partner with Microsoft, Apple has opted for a closed ecosystem in which it controls the entire experience (hardware, software, phone activation, etc.), and Google has invested in an open sourced platform with Verizon as the open carrier."

"With these three major players competing for customer support, it will be interesting to see what wireless users come to expect over the next several years. If consumer demand shifts toward an open system based on choice, then Apple's closed agreement with AT&T could become a limiting issue. However, we believe customers also appreciate and need simplicity," Munster said.

"Apple and AT&T's closed system enables a user to buy the phone activate and load it with media in a few easy steps, which is made possible by the closed nature of the iPhone ecosystem. We expect that, as with the iPod, customers will gravitate toward the seamless combination of Apple hardware and software, plus integration with iTunes, that the iPhone offers."